Yahoo co-founder Jerry Yang has quit the company he started in 1995.
Yang’s abrupt departure comes two weeks after Yahoo appointed Scott Thompson its new CEO, with a mandate to return the internet portal to the heights it enjoyed in the 1990s.
Yang, who is severing all formal ties with the company by resigning all positions including his seat on the board of directors, has come under fire for his handling of company affairs dating back to an aborted sale to Microsoft in 2008.
Yang’s exit comes roughly a month before dissident shareholders can nominate rival directors to Yahoo’s board.
Jerry Yang was certainly an impediment toward anything happening
The company did not say where Yang was headed or why he had suddenly resigned. Thompson offered few clues in a memo to employees obtained by Reuters following the announcement.
“I am grateful for the support and warm welcome Jerry provided me in my early days here. His insights and perspective were invaluable, helping me to dig deeper, more quickly than I could have on my own, into some of the key elements of the company and how it operates.
Yang and co-founder David Filo, both of whom carried the official title “Chief Yahoo,” own sizable stakes in the company. Yang owns 3.69% of Yahoo’s outstanding shares, while Filo owns 6% as of April and May 2011.
No longer Chief Yahoo
In a letter to Yahoo’s chairman of the board, Yang said he was leaving to pursue “other interests outside of Yahoo” and was “enthusiastic” about Thompson as the choice to helm the company.
Yang has come under fire over the years from investors and to some extent within the company’s internal ranks.
“Lots of people think he holds up innovation there with old ideas and (is) slow to decide and that he’s not an innovator himself for being at such a high level,” said one former Yahoo employee.
“People have very high expectations for founders. Everyone wants a Steve Jobs,” the employee said.
“Jerry Yang was certainly an impediment toward anything happening,” said Morningstar analyst Rick Summer. “This is a company that’s been mired by a bunch of competing interests going in different directions. It was never clear what this board’s direction has been.”
Microsoft’s bid was worth about $44 billion. Its share price was subsequently pummeled by the global financial crisis and its current market value stands at about $20 billion.
What next for Yahoo?
More recently, Yang and Yahoo chairman Roy Bostock have incurred the wrath of some major Yahoo shareholders for their handling of the “strategic review” the company was pursuing, in which discussions have included the possibility of being sold, taken private or broken up.
Yang’s efforts to seek a minority investment in Yahoo from private equity firms enraged several large shareholders, including hedge fund Third Point, which accused Yang of pursuing a deal that was in “his best personal interests” but not aligned with shareholders’ interests.
Yahoo has also been exploring a deal to unload most of its prized Asian assets in a complex deal involving Alibaba, valued at roughly $17 billion, sources told Reuters last month.
Susquehanna analyst Herman Leung said: “I had thought that Jerry Yang was a lifer at Yahoo. Without him on the board, this could smooth a potential transaction. What that transaction is, is any of our guesses right now.”
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